10 October 2016
Rental property can be a great way to earn a supplemental or primary income. While being a landlord often gets placed in the category of passive income, it’s important to know that managing the rental of one or more properties does require work. By approaching this activity as a business, you’ll be able to take the necessary steps to get the most out of it. One of those steps is understanding and utilizing landlord insurance.
The most common misconception about rental properties is that they’re covered by a homeowners policy. If you own a property in Cincinnati but rent it out to others instead of living in it yourself, the way to protect it is with a landlord insurance policy. The other misconception we often hear about this type of policy is people assume its purpose is to protect tenants. While tenants can get renter’s insurance to protect all of their belongings, a landlord insurance policy provides protection to a property’s landlord.
As with many types of insurance, the coverage available for a landlord policy ranges from basic to very broad. For example, a policy written with open perils coverage means other than named perils like earthquakes and floods that are specifically excluded, everything else will be covered. On the other hand, some people opt for a named perils policy, which will only cover issues that are specifically listed.
In terms of deciding the specific type of coverage that’s right for you as a landlord, you’ll also want to compare actual cash value coverage against replacement cost value coverage. Cash value coverage factors in what can be a significant amount of depreciation and generally won’t pay out enough for a full rebuild. Cost value coverage makes it possible to determine the total cost of a complete rebuild and then insure against that amount.
In the event that a home is damaged, tenants will have to move out until it’s rebuilt and a landlord won’t be able to collect rent. You can protect yourself by making sure the policy you choose provides coverage for loss of rent. Liability coverage is another good idea for landlords. When added to a policy, this coverage can protect against issues like being sued for wrongful entry or someone getting injured on the property. Finally, including personal property coverage in a landlord policy can protect any maintenance equipment or other personal property you keep at a rental home.
If you know you need landlord insurance but aren’t sure where to get it, Cincinnatus Insurance can help. We make it easy to compare quotes online. You can also always reach our office by calling 513-587-3553.